Four Crises of the Contemporary World Capitalist System
This essay examines aspects of the global political economy that I hope will inform progressive governments and movements for social change. It evaluates the constraints and opportunities presented in the current conjuncture of world capitalist development by analyzing four areas of crisis in the contemporary world capitalist system. These are not the only contradictory elements in the contemporary conjuncture, but they are, in my view, the most salient… | more |
September 2008, Volume 60, Number 4
Just over a year since the beginning of the worst U.S. financial crisis since the Great Depression, and only six months after the federal bailout of Bear Stearns, the seizing up of credit markets continues. The failure of eight U.S. banks this year, including IndyMac, and the recent instability that struck the two government-sponsored mortgage giants, Fannie Mae and Freddie Mac, requiring a special government rescue operation, has had the entire financial world on edge. Mortgage-related losses by themselves “could cause a trillion dollars in credit to vaporize,” according to a special July 28, 2008,Business Week report. The downside effects of financial leveraging (the magnification of results associated with borrowed money) mean that each dollar lost by financial institutions could lead to reductions in lending of fifteen dollars or more, creating a shockwave so massive that it could reveal structural weaknesses throughout the economy. Already the economy is reeling, with faltering growth, a deep slump in housing, massive job losses, rapidly rising oil and consumer goods prices, and a falling dollar… | more |
June 2008, Volume 60, Number 2
The first third of 2008 should have been a wake-up call to those who, in the short-lived days of capitalist triumphalism, were inclined to lose sight of the immediacy of the internal contradictions of capitalism and of the resistance that the system continuously regenerates. The enormous extent of today’s combined world food-and-economic crisis is now patently obvious. Anti-imperialist and anticapitalist initiatives are once again mushrooming around the globe.… | more |
As the United States braces itself for the onset of a recession, much of the blame for the current downturn is being attributed to the recent subprime mortgage crisis. While boom and bust cycles in real estate markets are nothing new, what distinguishes the current crisis is that the massive run-up in home prices was driven by the proliferation of new forms of securitized finance that permitted massive sums of loan capital to be pumped into the property markets. Only a few years prior these exotic financial products were being touted for their ability to hedge risk and achieve a more efficient allocation of credit. Buoyed by an exuberant sense that the wizards of Wall Street had so thoroughly transformed the nature of risk that the rules of the game had been fundamentally altered, investor demand for these securities exploded, and the underwriting and trading of these new forms of engineered debt underwent an extraordinary period of growth…… | more |
The Financialization of Capital and the Crisis
With the benefit of hindsight, few now doubt that the housing bubble that induced most of the recent growth of the U.S. economy was bound to burst or that a general financial crisis and a global economic slowdown were to be the unavoidable results. Warning signs were evident for years to all of those not taken in by the new financial alchemy of high-risk debt management, and not blinded, as was much of the corporate world, by huge speculative profits. This can be seen in a series of articles that appeared in this space: “The Household Debt Bubble” (May 2006), “The Explosion of Debt and Speculation” (November 2006), “Monopoly-Finance Capital” (December 2006), and “The Financializ-ation of Capitalism” (April 2007). In the last of these we wrote…… | more |
An Age of Transition: The United States, China, Peak Oil, and the Demise of Neoliberalism
Until recently, the global capitalist economy has enjoyed a period of comparative tranquility and grown at a relatively rapid pace since the global economic crisis of 2001–02. During this period of global economic expansion there have been several important economic and political developments. First, the United States—the declining hegemonic power but still the leading driving force of the global capitalist economy—has been characterized by growing internal and external financial imbalances. The U.S. economy has experienced a period of debt-financed, consumption-led “expansion” with stagnant wages and employment, and has been running large and rising current account deficits (the current account deficit is a broad measure of the trade deficit). Second, China has become a major player in the global capitalist economy and has been playing an increasingly important role in sustaining global economic growth. Third, global capitalist accumulation is imposing growing pressure on the world’s natural resources and environment. There is increasingly convincing evidence that the global oil production will reach its peak and start to decline in a few years. Fourth, the U.S. imperialist adventure in the Middle East has suffered devastating setbacks and there has been growing resistance to neoliberalism and U.S. imperialism throughout the world.… | more |
Global Economic Crisis, Neoliberal Solutions, and the Philippines
The economic crisis that has been affecting the global economy for the last two and a half years started in East Asia. We’ve heard story after story about the problems in Thailand, South Korea, Indonesia, Malaysia, China, and even Japan—but we’ve heard almost nothing about the situation in the Philippines. Is there something that the U.S. government, the International Monetary Fund (IMF), and the World Bank don’t want us to know about the situation there? … | more |
The Geopolitics of the Asian Crisis
The Chinese character for “crisis” combines the ideas of danger and opportunity. In the span of about one year, a regional economic “miracle,” with its promise of continued high economic growth and opportunity for all, was transformed into a severe regional, and potentially global, economic collapse. It has seriously endangered the livelihood of millions of people, causing untold misery and suffering … | more |
December 1998, Volume 50, Number 7
Back in 1972, when one of us was living in Toronto, the Canadian national hockey team played a series of much publicized games against the Soviet Union. Horror of horrors, the Soviet team started winning. The defeat of Canada’s favorites at its own national sport, and, worst of all, at the hands of Communists, was an occasion for some deep national soul-searching in the mainstream press. There were some astonishing editorials, which came very close to questioning the fundamental values of capitalism if it could so weaken the moral fiber of Canadians as to lead them to defeat by the Communist adversary at their very own game … | more |
June 1998, Volume 50, Number 2
» Notes from the Editors What’s the matter with Japan? According to today’s conventional wisdom—i.e., what we are told by the media and the syndicated pundits—almost everything. Its economy, the second largest in the world, is in a long-term crisis that affects on everyone else, most severely the United States, and it stubbornly refuses to do… | more |
March 1998, Volume 49, Number 10
A striking feature of the mountain of talk about the Asian crisis is that its root cause is all too often ignored The focus of the media and the pundits is on weak banks, bad management, corrupt officials, heavy indebtedness, excess speculation, and the fragility of the financial markets. Typically, the disaster is viewed as a regional affair. A rare exception is the statement of Eisuke Sakakibara, Japan’s vice-minister for international finance: “This isn’t an Asian crisis. It is a crisis of global capitalism.” (Business Week, January 26, 1998) But he too was apparently thinking of financial markets, concerned with effects, not causes … | more |
